Bill adds $16-$34 to car costs
By Treena Shapiro
Advertiser Staff Writer
The City Council is poised to increase motor vehicle weight taxes by 60 percent next year to cover an arbitrated police contract it approved earlier this month.
Bill 69, which proposes raising the motor vehicle weight tax for passenger vehicles from 1.25 cents to 2 cents a pound on Jan. 1, passed through the Budget Committee yesterday.
The tax increase would mean Honolulu's owners of 545,323 passenger vehicles would have to pay an extra $16 to $34 on their annual motor vehicle registration.
The committee also passed a bill that would put a cap on city spending even though it has been advised that it will have to break the cap to cover the police contract, which will cost $5.8 million this year and $66.4 million over the four-year contract. Both bills will go before the council for a final vote on Dec. 3.
Only Charles Djou voted against the weight tax bill, proposing a cut of $5.8 million in the city budget. That, city Budget Director Ivan Lui-Kwan said, would require laying off 375 employees.
After rejecting a proposal to raise the gasoline tax, the council's only option for raising revenue this year was increasing the weight tax, Lui-Kwan said.
He advised against deferring the payment until next year and covering it with a property tax increase instead, as suggested by Councilman Romy Cachola. "All you're doing is pushing back an obligation that clearly needs to be met," Lui-Kwan said.
Ken LeVasseur of Gomes School Bus Service Ltd., said his company would have to pay $15,000 to $20,000 more to cover registration costs for its 85 buses and four trucks.
He argued that commercial vehicle owners should be exempted from the tax increase for the length of their long-term contracts, since the contracts were written with the current taxes in mind.
"If you pass this as written, companies are going to need to cut jobs," LeVasseur said.
Taxi drivers also opposed the measure, although they came armed with incorrect figures and thought their taxes would increase by $112, rather than the proposed $33 a year. Even with the lower taxes, however, cab driver Craig Maeshiro said, "I don't know how much more we can bear."
The council also looked at revamped versions of debt and expenditure caps that could not pass the full council earlier month. The new bills 61 and 62 are more palatable to the Tax Foundation of Hawai'i, but still did not pass the muster of the city administration. Lui-Kwan repeated warnings about having to pass exceptions to the artificial ceiling and jeopardizing the city's bond rating.
Councilwoman Barbara Marshall, the only committee member to oppose the spending limits, said she thought passing the bills could force the council to eat their words because they will be forced to lift the ceiling for certain expenses the council has no control over. She also suggested that the ceiling would cause the administration to "drop more things (like the police raises) in the council's lap."
Bill 61 would limit general obligation bond debt service to 20 percent of the average operating budget appropriation. Bill 62 would limit expenditures by a formula based on population plus growth.
Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.
